107/00
4th October 2000
UK OFFICIAL HOLDINGS OF INTERNATIONAL RESERVES:
Part I: UK Government Foreign Currency Assets and Liabilities - September 2000
1. The UK Government's net reserves fell by $41 million in September, bringing the end-September total to $13,550 million (£9,166 million1) compared with $13,591 million (£9,342 million2) at the end of August.
|
US $ million: market values |
|||
|
end August 2000 |
end September 2000 |
||
Gross Reserves3 |
42,026 |
42,926 |
|
| Liabilities |
-28,435 |
-29,375 |
|
|
of which |
|||
|
foreign currency forwards and swaps (net)4 |
-10,067 |
-10,722 |
|
|
O/a repo transactions5 |
-376 |
-625 |
|
|
Net reserves6 |
13,591 |
13,550 |
|
Changes in net reserves |
-41 |
||
|
of which |
|||
|
valuation effects |
-52 |
||
|
transactions against sterling |
11 |
||
|
of which |
|||
|
UK public sector customers |
-1,159 |
||
|
Other |
1,170 |
||
2. As set out in the Chancellor's letter of 6 May 1997 to the Governor of the Bank of England, if the Government so instructs then the Bank, acting as its agent, may intervene in the foreign exchange market by buying or selling the government's foreign exchange reserves. Intervention was undertaken on one occasion in the month, on 22 September, when the Bank purchased ?85 million against sterling. This action was taken as part of a concerted intervention by the G7 monetary authorities because of the shared concern about the potential implications of recent movements in the euro for the world economy.
Part II: Bank of England Foreign Currency Assets and Liabilities - September 2000
1. The Bank of England's net holdings of foreign currency and gold rose by $49 million in September, bringing the end-September total to $121 million (£82 million1) compared with $72 million (£49 million2) at the end of August.
US $ million: market values
|
|||
|
end August 2000 |
end September 2000 |
||
Assets3 |
8,387 |
8,504 |
|
|
-8,315 |
-8,383 |
||
|
of which |
|||
|
foreign currency forwards and swaps (net)4 |
19 |
3 |
|
|
O/a repo transactions5 |
0 |
0 |
|
Net assets6 |
72 |
121 |
|
Changes in net holdings |
49 |
||
|
of which |
|||
|
valuation effects |
49 |
||
|
transactions against sterling |
0 |
||
|
of which |
|||
|
UK public sector customers |
0 |
||
|
Other |
0 |
||
2. As set out in the Chancellor's letter of 6 May 1997 to the Governor of the Bank of England, the Bank may also undertake foreign exchange operations to intervene in support of its monetary policy objective. If intervention is undertaken, the monthly press release will provide details of the amount and date of intervention and an explanation of why it was undertaken. No such intervention operations were undertaken by the Bank in September.
3. The Bank of England's foreign currency assets and liabilities arise from foreign currency and gold deposits placed with the Bank by overseas central banks and other customers, the net effect of foreign exchange swaps conducted in the course of the Bank's money market operations, UK participation in the TARGET system, the Bank's Euro Bill programme, and other capital items. The foreign exchange swaps are undertaken as a supplement to the Bank's usual money market techniques to provide sterling liquidity to the market, and are purely technical in nature. The proceeds of the Bank's Euro Bills are used to finance the provision by it of intra-day liquidity, on a secured basis, to participants in CHAPS euro, as part of the arrangements for TARGET.
4. The Bank's participation in the TARGET system gives rise to large and variable euro balances with other central banks operating the system. These are largely offset by similar balances that the other central banks hold at the Bank, and lead to small net liabilities to commercial banks participating in the system. The resulting assets and liabilities are reflected net in the table above, where they increased assets and liabilities by $53 million at the reporting date. The Bank's gross claim on other central banks was $25,507 million at the end of the month.
1 When converted at the closing market rate (5pm) of £1 = $1.4783 on 29 September 2000.
2 When converted at the closing market rate (5pm) of £1 = $1.4548 on 31 August 2000.
3 In this presentation gross reserves exclude marked to market valuation of foreign currency forwards and swaps. These derivatives are shown (excl sterling leg) within liabilities.
4 Net present value of foreign currency forwards, interest rate and cross currency swaps (excl sterling leg).
5 Market value of liabilities to repay foreign currency received in repo transactions.
6 Figures may not sum due to roundings.
Notes to Editors
Background
1. The UK's international reserves are now being published in accordance with the methodology developed by the International Monetary Fund in the context of revisions to their Special Data Dissemination Standard (SDDS), and the G10 central banks in their report ?Enhancing transparency regarding authorities? foreign currency liquidity position?.
2. The UK began to disclose additional information on its foreign currency assets and liabilities required under the International Monetary Fund's Special Data Dissemination Standard (assets, liabilities and derivatives) from July 1999. Data for end-July 1999 onwards can be found on the Bank of England's website.
External links
Methodology and definitions
3. The Bank of England's website also provides information on the methodology now used and definitions of the main conventions employed.
A National Statistics publication
4. National Statistics are produced to high professional standards set out in the National Statistics Code of Practice. They undergo regular quality assurance reviews to ensure that they meet customer needs. They are produced free from political interference.
Next publication date
6. The figures for October 2000 will be published on Friday 3 November 2000.
Enquiries
7. Media enquiries about this press release should be addressed to Charles Keseru in the Treasury Press Office on 020 7270 5188.
8. Public enquiries (non-media) about this press release should be addressed to the Treasury's Public Enquiry Unit on
Telephone: 020 7270 4558
Fax: 020 7270 4574
National Statistics Public Enquiry Service
9. For general enquiries about National Statistics, contact the National Statistics Public Enquiry Service on
Telephone: 020 7533 5888
minicom 01633 812399
Fax 01633 652747
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